Asian Stocks Rise Third Day on U.S. Economic Optimism

May 26 (Bloomberg) -- Asian stocks rose for a third day,
with the regional gauge poised for the highest close in almost
six months, after an increase in U.S. home purchases boosted
confidence in the world’s largest economy.

Honda Motor Co., a Japanese carmaker that gets 83 percent
of sales abroad, climbed 1.8 percent in Tokyo. Mitsubishi UFJ
Financial Group Inc. increased 1.6 percent as Japanese banks
advanced. Naver Corp. sank 4 percent in Seoul after two of its
competitors, Kakao Corp. and Daum Communications Corp., said
they will merge. Dainippon Sumitomo Pharma Co. plunged by a
record as it suspended a study on an experimental cancer drug.

The MSCI Asia Pacific Index added 0.4 percent to 141.54 as
of 4:03 p.m. in Hong Kong, headed for its highest close since
Dec. 3. All but one of its 10 industry groups rose. Purchases of
new American homes climbed in April for the first time in three
months as buyers took advantage of falling mortgage rates,
driving U.S. stocks to a record high last week. U.S. and U.K.
equity markets are closed for holidays.

“A range of indicators suggest growth is bouncing back
this quarter,” said Shane Oliver, who oversees about $133
billion as Sydney-based head of investment strategy at AMP
Capital Investors Ltd. “The broad trend in shares is expected
to remain up. Share-market fundamentals remain favorable with
reasonable valuations, global earnings are improving on the back
of rising economic growth and monetary conditions are set to
remain easy for some time.”

A Commerce Department report showed U.S. home sales
increased 6.4 percent last month, the most since October.
Declining borrowing costs and greater employment opportunities
raise the prospects for an industry that has struggled to build
on gains made earlier last year.

Manufacturing Boost

The Asia-Pacific gauge advanced the past two weeks as U.S.
and Chinese manufacturing beat estimates and a weaker yen
boosted Japanese equities. That left the measure trading at 12.9
times estimated earnings on May 23 compared with 16.1 for the
S&P 500 and 15.3 for the Stoxx Europe 600 Index, according to
data compiled by Bloomberg.

S&P 500 futures added 0.3 percent today. The measure gained
1.2 percent last week to a record 1,900.53, with the gauge
trading in the tightest range in eight years, according to data
from Bespoke Investment Group LLC. In the last three months, the
difference between the S&P 500’s intraday high and low has been
less than 5 percent.

Dainippon Sumitomo Pharma plunged 21 percent to 1,158 yen
after stopping the study on an experimental drug for colorectal
cancer when an independent safety monitoring committee said the
drug failed to meet the criteria set for managing the disease.
Its biggest shareholder Sumitomo Chemical Co. dropped 5.2
percent to 365 yen.